Ass’s milk

Nigel Davies wonders what the latest position is with the EU savings tax directive and discovers that Italian milk quotas have stolen the agenda

What will be the outcome of the EU Tax Package is anybody’s guess. Last Tuesday, 13 June, EU member states met again to see if they could reach some sort of conclusion on the never-ending story of whether to adopt a withholding tax or adopt an exchange of information system in respect of EU citizens’ cross border savings and investments. Yet all they seem to talk about is milk; or, to be precise, Italy’s troubles with its milk quotas.

It’s hard to know what to make of it all. Are all member states really sitting around a table sipping on a glass of cow juice that has been overproduced by Italy or are they actually making some progress towards resolving the issue of exchanging information or imposing withholding taxes?

It was reported last week that chancellor Gordon Brown was so incensed about all the talk of the white stuff that he refused to participate in discussions on the issue. So, the tax package is nowhere near complete and Investment International is willing to offer odds of 25/1 that member states still won’t be able to offer a definitive decision on exchange of information or withholding tax after they next meet up on 3 June 2003.

In response to all this bureaucratic idiocy, Jersey has issued a statement to say that there is a “general determination amongst EU Member States to aim for a final agreement on the EU Tax Package at the next ECOFIN meeting”, which sounds at least hopeful, though consultation is ongoing between the Jersey government and its finance industry.

The same general view is also offered by the Isle of Man and Guernsey.
Ian Kelly, tax assessor in the Isle of Man, said: “We think it’s prudent to see if it [the savings tax package] is adopted first before making a decision. If a resolution is met on 3 June, then we will possibly make a decision shortly after that date.”

John Bridle at the Guernsey Promotional Agency has also stated that: “If the Tax package is adopted we will go for the retention tax, but we will not decide anything before then.”

But, as we say, these negotiations about information sharing or withholding tax will require across-the-board agreement from all countries and all countries will demand a level playing field. Given that it is nigh impossible to achieve a level playing field in such multi-lateral discussions where many parties have vested interests, this one is likely to run and run and run. And then run some more.

Apparently, milk will be talked upon as a side-issue before the June meeting, so that does offer a slim chance that the matter be resolved before things curdle.